- You want to compare rates and features of multiple insurers. This will help you obtain the most comprehensive coverage at the lowest cost.
- You should work with an independent insurance agent who can obtain multiple quotes and help you determine the best coverage for your needs.
- Your age, health and lifestyle will largely determine how much you pay in premium.
- How much coverage you elect and any optional riders you choose will also impact your premium payment.
- The process from application to having your policy delivered could take four to eight weeks.
- It’s important to be honest on your application and make sure you fill out all required paperwork completely and accurately to avoid delays.
Once you’ve decided on a life insurance policy, the first step is completing the application form, which will be several pages. In addition to basic information, life insurance applications will ask several health related questions such as conditions you have been diagnosed with, medications you are taking, and family health history.
You or your agent will submit the form along with supporting documentation. You will also have authorize release of medical records.
Once the application has been submitted, the insurer will schedule a paramedical exam. This will consist of an interview to gather a medical history, as well as collection of blood and urine and recording of height, weight, blood pressure and pulse.
The results of the exam plus your medical records will be sent to the insurance company’s underwriter, who will then assess the probability of you passing away within a certain time period.
Based on your risk assessment, you will receive an offer with a premium amount. If you accept the offer, the insurance company will issue your policy.
Underwriting is the lengthiest part of the life insurance application process.
Age and gender will be key considerations. The younger you are, the more likely you are to live longer than somebody is who is older. Also, since women have a higher average life expectancy than men, they will typically pay a smaller premium.
The next most important factor is your health. Underwriters will base your health risk on the following factors:
- Your height and weight. As a physician, you know the risks of obesity on a person’s health. Likewise, life insurance underwriters have guidelines for the optimal weight for men and women of certain heights. The more you deviate from these guidelines, the more risk you present and the higher your premium may be.
- Your overall health. Minor ailments and chronic diseases will impact how you are underwritten. The more serious the condition, the more you’ll pay for coverage. In some cases, you may even be denied because of your health. Conditions that impact insurance rates include asthma, high blood pressure, and high cholesterol, as well as cancer, heart disease, diabetes, HIV/AIDS, and depression. To minimize the impact of health conditions, you need to demonstrate to underwriters that you are properly managing your health, taking your medication if applicable, and following a physician’s recommendations.
- Family history. Even if you don’t have a condition, the incidence of heart disease, cancer, and other diseases in your family carries greater underwriting risk. Insurance companies will assess how long members of your family lived with a condition to predict your life expectancy.
- Smoker status. Life insurance companies use two sets of risk classes to assess premium rates, one for smokers and one for non-smokers. If you smoked for several years but have quit, you will likely be assigned smoker status. On the other hand, many insurers will make concessions for people who smoke occasional cigars.
- Alcohol use. Similar to how smoking affects a person’s underwriting, an insurance company will also assess the prevalence of alcohol in your life. In addition to the health problems caused by alcohol abuse, regular alcohol use presents higher risk for accidental deaths.
Beyond current health, underwriters will look for other factors to assess the risk of an applicant, including:
- Driving record. Life insurance companies will access your driving record to determine if you carry a greater risk of being involved in a fatal car accident.
- Hobbies. Applicants who participate in high-risk activities will likely pay a higher premium. Examples include flying aircraft, sky diving, rock climbing, race-car driving, and scuba diving,
- Foreign travel. Some insurers consider frequent foreign travel a risk factor. How much of a risk will depend on where you travel and how much.
- Employment. Jobs that are considered dangerous will affect a person’s life insurance underwriting, however physicians typically do not fall into this category.
Based on these factors, the insurance company will assign you a rating. The most common rating is standard, which means the applicant carries an average amount of risk.
If you are young, in optimal health and/or carry few other risk factors, you may receive a select or preferred rating, which will result in paying less premium than if you qualified as a standard risk.
If you carry above average risk factors, you may receive what is called a table rating. Table ratings allow an insurer to further assess an applicant in accordance with their risk level and to provide coverage at an increased rate.
Tables ratings are usually letter grades from A to the whatever the lowest rating an insurer will consider. For example, an applicant that has a table rate of A will usually pay the standard rate plus an additional percentage.
Just like with disability insurance, different life insurance companies will assess these risk factors differently. This makes it all the more important to work with an independent agent who can compare rates and underwriting standards.
For example, some insurers will minimize the effect of high-risk hobbies on your underwriting, especially if you have a license or certification and a certain amount of experience.
It’s also important that you use your medical knowledge to ensure the best health underwriting: make sure at the time of your exam that your blood work comes back as positive as possible and that your weight and blood pressure are as optimal as you can make them.
Still have questions? This will help you answer them:
The Ultimate Guide to Physician Life Insurance in 2021
Joel Palmer is a writer and personal finance expert who focuses on the mortgage, insurance, financial services, and technology industries. He spent the first 10 years of his career as a business and financial reporter.